For Knee or Hip Replacements, Wildly Different Prices Suggest That U.S. Health Care Must Heal Itself

Love it or hate it, Obamacare has made health care prices a little more transparent. And that's good for consumers. As more Americans compare the cost of health insurance plans, medical procedures and even prescription drugs, what's become apparent is there's often a wide range of prices for products and procedures that defies rational explanation.

Take the price of a knee or hip replacement, a common procedure that is both expensive and typically elective. According to NerdWallet Health, which tracks 3,200 hospitals across the country, the average price of a knee or hip replacement at St. Joseph's Medical Center in Yonkers, New York, is $17,068, while at Christ Hospital in Jersey City, New Jersey, the average cost is $139,072. Both facilities are large, general medical and surgical hospitals in the New York City area, just 30 miles apart, yet one charges about eight times as much as the other for the same basic procedure.

This underscores the increasingly obvious point that U.S. health care is not a well-functioning market. Patients are kept mostly in the dark. Hospitals, doctors and insurers have lots of information, but they still keep most of it to themselves. The amount consumers have to pay shows up when the work is already done, based on seemingly arbitrary charges by doctors and hospitals and the intricate arrangement of reimbursement and cost sharing established by each health insurer. Often, patients don't have real choices, since they need care and can't evaluate their options effectively. And even if consumers take the trouble to shop around for a doctor or hospital, there's no guarantee they will get billed the cost they expect. After all, who's to argue if the team in the operating room says it used more stitches than normal?

The starting place for a better health care market is to bring costs and prices out into public view. That, more than anything else, may be the greatest benefit of Obamacare.